Scrap permanent incentives not IPP, says Domingo

MANILA, Philippines - The government should repeal laws that grant permanent incentives and retain the Investment Priorities Plan (IPP) to ensure that perks are given only to those which need support, the country’s trade chief said.

“My preference is to retain the IPP and abolish laws that grant permanent incentives,” Trade Secretary Gregory Domingo told reporters yesterday.

The Department of Finance recently wrote the Senate’s Ways and Means Committee that the IPP, which identifies activities that can qualify for incentives from the government, should be carefully thought out and linked to the country’s development thrust as well as the state’s fiscal capacity.

This, as the incentives given to firms translate to foregone revenues of the government.

Domingo said the problem is not with the IPP though but with the country’s many laws which grant permanent incentives to different industries.

“Once you put it in the law, it becomes permanent, which is a bad policy,” he said.

Through the IPP, which is released every year, the government can ensure that incentives are only given to industries which still need support.

“Granting of incentives should not be permanent that is why the IPP, I think, is a superior mechanism instead of laws which grant permanent incentives because incentives should just be temporary (and given) while it is needed and while (sectors) are being promoted,” Domingo said.

“Once it (sector) is mature, you don’t need to grant incentives anymore,” he added.

The 2013 IPP, which is a carryover of the 2012 list with minor changes, has yet to be released.

While the government has yet to release the 2013 list, Domingo said that the 2012 IPP is currently being used.

Under the 2012 IPP, the following are listed as preferred activities: agriculture, agribusiness and fishery; creative industries or knowledge-based services; shipbuilding; energy; infrastructure; research and development; mass housing; green projects; motor vehicles; strategic projects; disaster prevention, mitigation and recovery projects; iron and steel; and hospital or medical services.

It also has a mandatory list covering industries that require their inclusion as provided for under existing laws and covers export activities as well as priority activities.